FCCC/CP/2022/10/Add.2
4
Decision 14/CP.27
Matters relating to the Standing Committee on Finance
The Conference of the Parties,
Recalling Articles 4 and 11 of the Convention,
Also recalling decisions 12/CP.2, 12/CP.3, 1/CP.16, paragraph 112, 2/CP.17,
paragraphs 120121, 5/CP.18, 5/CP.19, 7/CP.19, 6/CP.20, 6/CP.21, 8/CP.22, 7/CP.23,
8/CP.23, 4/CP.24, 11/CP.25, 5/CP.26, 5/CMA.2 and 10/CMA.3,
Taking note of decision 14/CMA.4,
1. Welcomes the 2022 report of the Standing Committee on Finance;
1
2. Also welcomes the fifth Biennial Assessment and Overview of Climate Finance Flows
of the Standing Committee on Finance and the summary, and takes note of the
recommendations contained in the annex;
2
3. Notes that climate finance flows in 20192020 were 12 per cent higher than in
20172018, reaching an annual average of USD 803 billion, driven by investments in energy
efficiency of buildings, sustainable transport and adaptation; the 20192020 annual average
of public financial support reported by Parties included in Annex II to the Convention in their
biennial reports (USD 40.1 billion) represents an increase of 6 per cent from the annual
average reported for 20172018; the annual average of climate finance from multilateral
development banks to developing countries and emerging economies
3
(USD 45.9 billion)
represents a 17 per cent increase since 20172018; and UNFCCC funds and multilateral
climate funds committed USD 2.9 billion and USD 3.5 billion for climate finance projects in
2019 and 2020 respectively;
4. Notes with concern that global climate finance flows are small relative to the overall
needs of developing countries;
5. Also notes with concern that, despite the clear increasing trend in global climate
finance flows, they remain at a relatively low level in the broader context of other finance
flows, investment opportunities and costs;
6. Encourages Parties to the Convention to consider implementing the recommendations
referred to in paragraph 2 above, as appropriate;
7. Acknowledges the improvement in quality, transparency and granularity of
information in the fifth Biennial Assessment while recognizing that data limitations persist,
particularly in relation to private climate finance, including private finance mobilized by
developed country Parties through bilateral and multilateral channels, and finance in sectors
other than energy and transport, and requests further work in this regard in the sixth Biennial
Assessment, including in relation to data by region, private finance mobilized from public
interventions and financing arrangements relevant to averting, minimizing and addressing
loss and damage;
8. Stresses the importance of reporting on climate finance provided, mobilized, needed
and received at both the activity and country level, and of enhancing methodologies for
measuring and reporting on the results and impacts of climate finance;
9. Notes that the work of the Standing Committee on Finance on definitions of climate
finance
4
shows the variety of definitions in use;
1
FCCC/CP/2022/8FCCC/PA/CMA/2022/7.
2
Also contained in document FCCC/CP/2022/8/Add.1FCCC/PA/CMA/2022/7/Add.1.
3
See footnote 2 in Standing Committee on Finance. 2022. Fifth Biennial Assessment and Overview of
Climate Finance Flows. Bonn: UNFCCC. Available at https://unfccc.int/topics/climate-
finance/resources/biennial-assessment-and-overview-of-climate-finance-flows.
4
See document FCCC/CP/2022/8/Add.2FCCC/PA/CMA/2022/7/Add.2.
FCCC/CP/2022/10/Add.2
5
10. Also notes the complexities associated with the diversity of definitions of climate
finance in use by Parties and non-Party stakeholders in relation to ensuring clear, aggregated
accounting and reporting of climate finance;
11. Requests the Standing Committee on Finance to prepare a report for consideration by
the Conference of the Parties at its twenty-eighth session (NovemberDecember 2023),
building on the Committee’s work on definitions of climate finance, on clustering types of
climate finance definitions in use that could be considered within the UNFCCC process,
including with a view to updating the Committee’s operational definition of climate finance,
as appropriate, and supporting Parties in their national reporting efforts and invites Parties
and external stakeholders to make further submissions thereon via the submission portal
5
by
30 April 2023;
12. Notes the report prepared by the Standing Committee on Finance on progress towards
achieving the goal of mobilizing jointly USD 100 billion per year to address the needs of
developing countries in the context of meaningful mitigation actions and transparency on
implementation;
6
13. Notes with concern that the draft guidance for the operating entities of the Financial
Mechanism prepared by the Standing Committee on Finance
7
was not utilized by the
Conference of the Parties and in this regard requests the Committee to improve its working
modalities for preparing the draft guidance for the operating entities of the Financial
Mechanism;
14. Expresses its sincere gratitude to the Government of Australia for its support in
ensuring the success of the second part of the Standing Committee on Finance Forum on
finance for nature-based solutions and notes with appreciation the high-level summary
thereof,
8
without prejudice to other multilateral processes, and welcomes the Forum’s specific
focus on indigenous peoples and knowledge;
15. Also welcomes financing just transitions as the topic for the Standing Committee on
Finance Forum in 2023;
16. Expresses its appreciation to the Governments of Australia and Germany and to the
European Commission for their financial contributions to support the work of the Standing
Committee on Finance;
17. Endorses the workplan of the Standing Committee on Finance for 2023
9
and
underlines the importance of the Committee focusing its work in 2023 on its current mandates;
18. Welcomes the efforts of the Standing Committee on Finance to continue to strengthen
its engagement with stakeholders in the context of its workplan, including UNFCCC
constituted bodies, private entities and other entities outside the UNFCCC, and encourages
the Committee to continue such efforts in 2023;
19. Also encourages the Standing Committee on Finance to continue to enhance its efforts
to ensure gender responsiveness in implementing its workplan and requests Parties to
consider gender balance and geographical representation when nominating members to the
Committee;
20. Encourages the Standing Committee on Finance to take further steps to accurately,
adequately and equitably reflect the views of Parties in its future reports and ensure that those
views are presented in a balanced manner that reflects their diversity;
21. Requests the Standing Committee on Finance to report to the Conference of the Parties
at its twenty-eighth session on its progress in implementing its workplan for 2023;
22. Also requests the Standing Committee on Finance to consider the guidance provided
to it in other relevant decisions of the Conference of the Parties.
5
https://www4.unfccc.int/sites/submissionsstaging/Pages/Home.aspx.
6
FCCC/CP/2022/INF.2.
7
FCCC/CP/2022/8/Add.5FCCC/PA/CMA/2022/7/Add.5.
8
FCCC/CP/2022/8/Add.6FCCC/PA/CMA/2022/7/Add.6.
9
FCCC/CP/2022/8FCCC/PA/CMA/2022/7, annex II.
FCCC/CP/2022/10/Add.2
6
Annex*
Summary and recommendations of the fifth Biennial
Assessment and Overview of Climate Finance Flows
[English only]
I. Context and mandates
1. The fifth BA conducted by the SCF
1
provides an updated overview of climate finance
flows up until 2020, highlighting the trends therein, and an assessment of the implications of
these flows for international efforts to address climate change. The fifth BA includes:
(a) Information on recent developments in methodologies related to the tracking
of climate finance at the international and domestic level, the operational definitions of
climate finance in use and the indicators for measuring the impacts of climate finance, as
well as emerging methodologies that support tracking the consistency of finance flows (see
also the box below);
(b) An overview of climate finance flows from developed to developing countries,
and available information on domestic climate finance, cooperation among developing
countries
2
and other climate-related finance flows that constitute global climate finance;
(c) An assessment of the key features of climate finance flows, including their
composition and purpose; an exploration of the effectiveness, accessibility and magnitude (in
the context of broader flows) of climate finance flows; and insights into country ownership
and alignment of climate finance flows with the needs and priorities of beneficiaries.
2. Since the first BA was conducted in 2014, the preparation of BAs has been guided by
mandates from the COP and the CMA to the SCF.
3
The fifth BA comprises this summary,
prepared by the SCF, and a technical report prepared by experts under the guidance of the
SCF drawing on information and data from a range of sources. The report was subject to
extensive stakeholder input and expert review, but remains a product of the external experts.
Challenges and limitations in collecting and aggregating data on climate finance
The challenges and limitations outlined below need to be taken into consideration when
deriving conclusions and policy implications from the fifth BA:
(a) The fifth BA covers 20192020, a period during which the coronavirus disease 2019
pandemic may have affected the provision, mobilization and reporting of climate
finance flows;
(b) In compiling the estimates of climate finance flows, efforts were made to ensure
they are based on activities that are in line with the operational definition of climate
finance adopted in the first BA in 2014 and to avoid double counting. Challenges were
* For the list of abbreviations and acronyms, see document
FCCC/CP/2022/8/Add.1−FCCC/PA/CMA/2022/7/Add.1.
1
The SCF assists the COP in exercising its functions with respect to the Financial Mechanism,
including in terms of measurement, reporting and verification of support provided to developing
country Parties through activities such as the BA. The SCF also serves the Paris Agreement, in line
with its functions and responsibilities established under the COP (as per decision 1/CP.21, para. 63),
including through the BA.
2
For the purpose of the overview of climate finance in the BA, various data sources are used to
illustrate flows from developed to developing countries, without prejudice to the meaning of those
terms in the context of the Convention and the Paris Agreement, including but not limited to flows
from Annex I Parties and Annex II Parties to non-Annex I Parties and MDBs; flows from OECD
members to non-members; flows from OECD Development Assistance Committee members to
countries eligible for OECD Development Assistance Committee official development assistance; and
other relevant classifications.
3
Decisions 2/CP.17, para. 121(f), 1/CP.18, para. 71, 5/CP.18, para. 11, 3/CP.19, para. 11, 4/CP.24,
paras. 4, 5 and 10, and 11/CP.25, paras. 910; and decision 5/CMA.2, paras. 910.
FCCC/CP/2022/10/Add.2
7
encountered in aggregating and analysing information from diverse sources with
varying degrees of transparency;
(c) In 2019, COP 25 changed the due date for submission of the fifth biennial reports
of Annex I Parties (including Annex II Parties), which were to include information on
climate finance provided to non-Annex I Parties in 20192020, to no later than 31
December 2022.
4
Therefore, during preparation of the fifth BA, the SCF invited
Annex II Parties to provide preliminary data on climate finance provided and mobilized
for 2019 and 2020. These preliminary data may be subject to change once fifth biennial
reports are submitted by Parties by the end of 2022;
(d) In the area of global climate finance, challenges remain in filling data gaps,
particularly on private finance for adaptation activities and for mitigation activities in
the AFOLU, the waste and the water and sanitation sectors. Methodologies for
calculating climate finance based on total cost or incremental cost produce different
estimates by activity. This potentially leads to limitations regarding the completeness
of data and any interpretation of the relative shares of global climate finance going to
different themes or sectors. Energy efficiency estimates do not include data broken
down by public or private actor financial instrument, or at country level. Some data
sources, such as those for renewable energy, provide activity-level data but may make
country- and technology-level assumptions on finance flows to fill data gaps. In
compiling data from various sources to aggregate global climate finance flows,
approaches that ensure the avoidance of potential overlaps in coverage are taken;
(e) Regarding domestic climate finance, although more countries are developing
climate finance reporting systems, time lags in implementation mean data are
underreported for 20192020. Amounts in relation to public expenditure may refer to
ex ante budget allocations or ex post actual expenditures. Furthermore, the climate
relevance of activities reported may refer to weighted criteria per activity or to positive
activity lists;
(f) Data on international climate finance flows are compiled using various
methodologies and have varying interpretations. Flows from developed to developing
countries covering finance provided, mobilized and received include a mix of data
based on disbursements to projects and recipients in the given year or on financial
commitments made in the reporting year to activities that may be implemented over
several years. Information on SouthSouth cooperation in climate finance flows
remains relatively underreported. The classification of data such as by geographical
region or by granularity is not uniform across data sources. As for previous BAs, for
the fifth BA, no aggregation of data from different sources for finance flows from
developed countries to developing countries was carried out owing to these
challenges and limitations.
The SCF will continue to contribute, through its activities, to the progressive
improvement of the measurement, reporting and verification of climate finance in future
BAs, to help address these challenges and limitations.
II. Key findings
A. Methodological issues related to transparency of climate finance
3. New reporting tables will improve the information on climate finance submitted
by Parties. CMA 3 adopted new tables for reporting by Parties under the Paris Agreement
on climate finance provided to and mobilized for developing countries and climate finance
needed and received by developing countries. The new tables will be used for reporting from
the end of 2024 in biennial transparency reports. A number of improvements will facilitate
enhancing the granularity of data reported on climate finance (including sectoral and
subsectoral data) and on whether the financial support also contributes to capacity-building
or technology transfer, and will provide an option to report on grant-equivalent amounts of
4
Decision 6/CP.25, para. 3.
FCCC/CP/2022/10/Add.2
8
climate finance provided and mobilized. In addition, CMA 3 requested the secretariat to
establish an interactive web portal to facilitate the availability of information on climate
finance reported by Parties.
5
4. The coverage and granularity of reporting on climate finance received by
non-Annex I Parties is improving. The proportion of BURs that include information on
finance received rose from approximately 60 per cent in 2014 to over 97 per cent in 2021. A
total of 70 Parties have provided quantitative information on climate finance received at the
project or activity level in tabular format. More Parties are reporting details on financial
instruments and implementing entities and on whether finance received is for mitigation or
adaptation. Information that is reported the least includes that related to the use, impacts and
results of climate finance. Limited capacities and resources to track climate finance received
can pose challenges for non-Annex I Parties in reporting this information, and a lack of
reporting on the year an activity received climate finance can make it difficult to compile and
aggregate data.
5. Systems to track domestic public climate finance are growing in both developed
and developing countries. Twenty-four jurisdictions have established tracking systems for
national budgets, with a further 24 countries having methodologies for tracking climate-
relevant budgets in development. Building on previous work carried out as part of the climate
public expenditure and institutional reviews of the United Nations Development Programme,
many countries are developing guidance on green budgeting frameworks that include
climate-relevant activities. Domestic public expenditures on climate change in 20192020
amounted to an estimated total of USD 134.2 billion (see chap. II.B below).
6. Renewable energy, CCU/S, electrified transport, energy efficiency of buildings,
and water management and supply are the most common mitigation activities listed
across international, regional and national taxonomies or classifications. An analysis of
12 classification lists or taxonomies related to climate change mitigation activities, including
those of MDBs and of regional and national jurisdictions, revealed that mitigation activities
that appear most commonly (in more than 75 per cent of lists) are renewable energy,
electrified transport, energy efficiency of buildings, water management and supply, and
abatement technologies (e.g. carbon dioxide capture and use or storage). Different eligibility
criteria are in use for common activities relating to agriculture, waste, transport infrastructure
and power generation (the latter including geothermal power, hydropower, bioenergy and
efficiency improvements). Less common activities (in 2575 per cent of lists) include gas-
fired power generation, waste-to-energy processes, sustainable logging, and information and
communication technology infrastructure. Of the uncommon activities (less than 25 per cent
of lists), notable are nuclear power generation, aviation and mining. Of the 12 taxonomies of
countries and institutions reviewed, 10 make use of exclusion lists across mitigation sectors.
For adaptation, most taxonomies refer to process-based screening methods rather than an
activity list owing to adaptation activities being specific to a given local environment or
context. The evaluation baseline for adaptation screening processes is typically based on
environmental and climate risk and vulnerability assessments or national, regional or global
resilience and biodiversity standards and codes. In addition, 7 of the 12 analysed taxonomies
apply the ‘do no significant harm’ principle (to other environmental objectives) when
assessing the eligibility of activities.
7. Climate finance providers are advancing more indicators and metrics to measure
what climate finance is achieving on the ground. Multilateral climate funds (including the
operating entities of the Financial Mechanism), multilateral institutions and national
development finance institutions are in the process of developing or have already developed
frameworks for measuring outputs, outcomes and impacts of climate finance interventions,
with the granularity of indicators and metrics increasing. Multilateral climate funds, in their
results management frameworks, capture information on 141 indicators, 48 of which are core
indicators, and most multilateral institutions, as well as bilateral contributors, use a similar
set of mitigation and adaptation indicators. Common indicators identified for mitigation are
greenhouse gas emissions reduced (in t CO
2
eq) and sector-specific metrics for the energy,
transport and land-use sectors. For adaptation, common indicators in use are the number of
5
Decision 5/CMA.3.
FCCC/CP/2022/10/Add.2
9
beneficiaries; the hectares of land protected; and the number of policies, projects, plans,
systems or assets that foster climate resilience. An ongoing challenge is defining and
reporting on outcome and impact indicators that enable the long-term or indirect effects of
climate finance interventions (e.g. job creation or the increased climate resilience of
beneficiaries) to be captured as opposed to measuring direct project outputs (e.g. number of
beneficiaries or number of early warning systems installed). Methodologies for outcome
measurement are at earlier stages of development by climate finance providers than those for
output measurement.
8. Increasing efforts are being made to enhance the transparency and
comparability of approaches for tracking consistency with low-emission and climate-
resilient development pathways. Methodological developments in this area, particularly
from the private financial sector and supervisory authorities, are in a dynamic growth phase.
The aim of these initiatives and efforts is to offer discussion of and guidance on appropriate
choices of emission pathways and scenarios, emission metrics and measures, geographical
and sector coverage, the role of carbon offsets, the formulation and implementation of
transition plans and governance frameworks, and aggregate Paris Agreement alignment
indicators. In the financial sector, a focus of current approaches on decarbonization and net
zero targets, rather than on fostering climate change adaptation and resilience, continues to
be observed. Since the fourth BA, initiatives that seek to increase the transparency and
understanding of approaches for tracking consistency have emerged notable among these
are the United Nations High-Level Expert Group on the Net-Zero Emissions Commitments
of Non-State Entities and the Expert Peer Review Group under the Race to Zero campaign.
In addition, various private and public sector reports that assess approaches to alignment with
the Paris Agreement continue to be published (see SCF documents on work under this area
for further information).
6
B. Overview of climate finance flows in 20192020
9. Global climate finance flows were 12 per cent higher in 20192020 than in
20172018, reaching an annual average of USD 803 billion, with the trend being driven
by an increasing number of mitigation actions in buildings and infrastructure and in
sustainable transport, as well as by growth in adaptation finance. The growth in finance
flows in 20192020 was largely driven by increased investment in the energy efficiency of
buildings (USD 34 billion increase), sustainable transport (USD 28 billion increase) and
adaptation finance (USD 20 billion increase). While overall investment in clean energy
systems remained stable, public energy investment increased its share of total finance flows.
Adaptation finance increased by 65 per cent, from an annual average of USD 30 billion in
20172018 to USD 49 billion in 20192020, driven mainly by financing from bilateral and
multilateral development finance institutions. Figure 1 provides a breakdown, by sector, of
global climate finance flows in 20172020 and figure 2 provides an overview of global
climate finance and finance flows from developed to developing countries in 20192020.
6
FCCC/CP/2022/8/Add.3FCCC/PA/CMA/2022/7/Add.3 and
FCCC/CP/2022/8/Add.4FCCC/PA/CMA/2022/7/Add.4.
FCCC/CP/2022/10/Add.2
10
Figure 1
Global climate finance flows in 20172020 by sector
(Billions of United States dollars)
10. The continued decline in renewable energy technology costs in 20192020 compared
with those in 20172018 meant that renewable energy investments, despite the economic
slowdown caused by the coronavirus disease 2019 pandemic, remained close to the record
high in 2017. Technology cost decreases in 20192020 compared with 2018 for onshore wind
(13 per cent), offshore wind (9 per cent) and solar photovoltaic (7 per cent) emphasized how
greater impacts are now achieved for each new dollar invested. Aggregate investments in
new renewable energy generation projects made up the largest segment of global climate
finance. The declining costs of renewable energy alongside the maintenance of high levels
of investment indicates that the overall deployment of renewable energy technologies has
increased in real terms.
11. Government pandemic recovery packages included up to USD 513 billion of
spending allocated to green or climate-related measures (21 per cent of the total
USD 2.5 trillion) up until the end of 2020. Approximately 76 per cent (USD 392 billion) of
climate-related recovery spending was announced by developed countries and the remainder
by developing countries, particularly those in Asia. Data from climate budget tagging
systems and other sources indicated domestic public climate finance amounted to USD 134
billion per year in 20192020, half of which was in 21 developing countries and the other
half in 6 developed countries or jurisdictions.
Figure 2
Climate finance flows in 20192020
(Billions of United States dollars, annualized)
FCCC/CP/2022/10/Add.2
11
Notes: (1) Figure note (a): other mitigation investments include industry, waste and wastewater, information and communications
technology and other cross-sectoral investments; (2) Figure note (b): includes investments from amounts listed by sector above that are
discounted when calculating the global aggregate to avoid double counting; (3) Figure note (c): flows are from developed to developing
countries, see section 2.5.2 of the technical report of the fifth BA for further information; (4) Figure note (c): estimates include private
finance mobilized through public interventions by developed countries; (5) Figure note (d): this includes private finance in addition to
finance mobilized through bilateral and multilateral channels and institutions.
12. Public climate finance flows from developed to developing countries increased
by between 6 and 17 per cent, depending on the source, in 20192020 compared with
20172018. Preliminary data from Annex II Parties on climate-specific finance provided for
20192020 showed that it increased by 6 per cent from 20172018 to USD 40.1 billion per
year on average. Most of the climate-specific finance (79 per cent) was channelled through
FCCC/CP/2022/10/Add.2
12
bilateral, regional and other channels, with the remainder consisting of contributions or
inflows to multilateral climate funds and multilateral financial institutions.
13. Mitigation finance constituted the largest share of climate-specific financial support
through bilateral, regional and other channels, at 57 per cent (USD 17.9 billion). However,
the share of adaptation finance continued to increase from 20 per cent (USD 6.4 billion) in
20172018 to 28 per cent (USD 8.9 billion) in 20192020 as it grew at a higher rate than
mitigation finance. In 20192020, adaptation finance through bilateral, regional and other
channels grew 40 per cent while mitigation finance decreased by 13 per cent. The share of
cross-cutting finance, which serves both mitigation and adaptation purposes, stagnated at 14
15 per cent (USD 4.4 billion and USD 4.7 billion) in 20172018 and 20192020,
respectively.
14. UNFCCC funds and multilateral climate funds approved a combined USD 2.9 billion
and USD 3.5 billion for climate change projects in 2019 and 2020 respectively. The annual
average for 20192020 (USD 3.2 billion) represents an increase of 21 per cent compared
with the annual average for 20172018, attributable primarily to increases in project
approvals by the GEF Council, the GCF Board and the Clean Technology Fund. In terms of
inflows, the GEF raised USD 5.3 billion from 29 contributors under the GEF-8 replenishment
in 2022 for the programming period 20222026, an increase of more than 30 per cent
compared with the amount raised under GEF-7. Under GEF-8, USD 852 million was
allocated to the climate change focal area for mitigation, an increase of 6 per cent compared
with the amount allocated under GEF-7. The Adaptation Fund registered USD 356 million
in new pledges from 16 donors at COP 26, which is more than triple the amount it raised in
2020 (USD 116 million).
15. MDBs provided USD 46 billion and USD 45 billion in climate finance to developing
and emerging economies in 2019 and 2020 respectively. The annual average of USD 45.9
billion in 20192020 represents a 17 per cent increase compared with the 20172018 amount.
The attribution of these flows from developed to developing countries is calculated at
USD 29.330.5 billion in 2019 and USD 28.233.2 billion in 2020.
16. Data on private climate finance flows to developing countries remain challenging to
compile and assess. There is a methodological difference between measuring private finance
for climate action in general and measuring climate finance mobilized through public
interventions. With existing methodologies and approaches, tracking private finance
mobilized by technical assistance or policy interventions is difficult. Further, data sources
often do not specify whether private funds are sourced from private sector entities in
developed or developing countries and whether these funds are received by public or private
sector entities from developed or developing countries. OECD estimates that private climate
finance mobilized by developed countries through bilateral and multilateral channels
amounted to USD 14.4 billion and USD 13.1 billion in 2019 and 2020 respectively. The
annual average of USD 13.8 billion represents a 6 per cent decrease compared with the annual
average of USD 14.6 billion in 20172018.
17. The increase in submissions of BURs from non-Annex I Parties resulted in a greater
amount of information on finance being available for the fifth BA than for previous BAs.
However, time lags in data availability for reporting made it difficult to compile updated,
complete information on finance received in 20192020. Of the 79 Parties that had submitted
BURs as at 30 June 2022, 28 included some information on climate finance received in 2019
or 2020 in their reports. In total, USD 10.0 billion was reported as received for projects
starting in 2019 and USD 1.6 billion for projects starting in 2020. Approximately 81 per cent
of the 2019 amount was specified as coming from bilateral institutions in developed countries
or multilateral institutions and 15 per cent from institutions based in developing countries;
the origin of the finance was unspecified for the remaining amount.
18. Trends in SouthSouth climate finance flows varied depending on the source of
finance. Finance commitments from International Development Finance Club members
based in non-OECD countries to projects in other non-OECD countries amounted to USD 1.7
billion and USD 2.2 billion in 2019 and 2020 respectively, which represented a substantial
decrease from the USD 4.1 billion committed in 2018. The Asian Infrastructure Investment
Bank and the New Development Bank continued to increase finance flows, and
FCCC/CP/2022/10/Add.2
13
MDB-attributed financing from non-Annex II Parties increased from around USD 9.1 billion
in 20172018 to an annual average of USD 11.0 billion in 20192020. Investments in
renewable energy and sustainable transport projects decreased from an annual average of
USD 3.2 billion in 20172018 to USD 2.6 billion in 20192020. Overall, the availability of
data on and the coverage of climate finance flows between developing countries remain
limited.
C. Assessment of climate finance flows
19. The collective goal of jointly mobilizing USD 100 billion per year by 2020 to
address the needs of developing countries in the context of meaningful mitigation action
and transparency on implementation was not fully met in 2020.
7
20. More public finance flows from developed to developing countries are for
mitigation than for adaptation, yet adaptation finance has grown significantly through
bilateral channels and MDBs. In 20192020, on average, mitigation had a 57 per cent share
(USD 17.9 billion) of bilateral climate finance, a 37 per cent share (USD 1.2 billion) of
multilateral climate fund climate finance and a 62 per cent share (USD 23.6 billion) of MDB
climate finance, while adaptation had corresponding shares of 28, 19 and 36 per cent
(USD 9.0 billion, USD 605 million and USD 13.8 billion respectively). Since 20172018,
adaptation finance from bilateral channels has grown by 39 per cent (USD 2.5 billion) and
from MDBs by 48 per cent (USD 6 billion), while adaptation finance from multilateral
climate funds has remained constant. The share of public climate finance flows contributing
to both adaptation and mitigation from multilateral climate funds rose to 35 per cent (USD 1.1
billion) in 20192020 from 27 per cent (USD 785 million) in 20172018. When assessing
the balance of finance between mitigation and adaptation, it is worth considering different
approaches to measuring climate finance flows and considering whether data are adjusted by
the financial instrument providing the resources. Information on face-value financial volume
can be complemented with information on grant-based equivalent financial volume (as is
done by the GCF to assess its mitigation and adaptation split). The number of interventions
and information on how different institutions allocate finance can also help inform
discussions on balance.
21. Public adaptation finance is predominantly delivered through grants while
public mitigation finance predominantly takes the form of loans. In 20192020, grants
accounted for 57 and 99 per cent (USD 8.5 billion and USD 1.2 billion) of the face value of
bilateral adaptation finance and of adaptation finance from multilateral climate funds
respectively, compared with 64 and 95 per cent (USD 5.9 billion and USD 1.1 billion)
respectively in 20172018. In 20192020, 15 per cent of adaptation finance flowing through
the MDBs was grant-based (USD 2.1 billion) (see figure 3). Mitigation finance remains less
grant-based in nature, with 31 per cent of bilateral flows (USD 4.6 billion), 30 per cent of
multilateral climate fund approvals (USD 865 million) and less than 5 per cent of MDB
investments (USD 1.1 billion) taking the form of grants.
7
For more information see document FCCC/CP/2022/8−FCCC/PA/CMA/2022/7.
FCCC/CP/2022/10/Add.2
14
Figure 3
Public climate finance flows from developed to developing countries in 20192020, by
theme, source and financial instrument
Source: Analysis of OECD Development Assistance Committee Creditor Reporting System
statistics and Climate Funds Update.
22. Reflecting their geographical and population sizes, Asia and Africa are the
regions receiving the largest total amounts of public climate finance. Asia received the
most climate finance for adaptation and mitigation projects and programmes from bilateral
channels, multilateral climate funds and MDBs, with an average of 36 per cent of the total
climate finance provided. Asia was followed by Africa (average of 27 per cent) and Latin
America and the Caribbean (average of 16 per cent). The remainder was shared among
developing countries of Eastern and Southern Europe and Oceania.
8
On a per capita basis,
the less populous developing country regions Oceania and Eastern and Southern Europe
received the largest amounts of climate finance (USD 5.149.5 and USD 1.084.2
respectively), followed by Latin America and the Caribbean (USD 0.810.7), Africa
(USD 0.68.4) and Asia (USD 0.24.0). These data do not, however, consider differing costs
for climate change solutions in different regions, adjust for purchasing power or address the
relative scale of climate vulnerabilities or emission reduction potential.
23. Support provided to the LDCs and SIDS as a proportion of overall public climate
finance flows remained relatively stable compared with previous years. In 20192020,
funding provided to the LDCs accounted for 25 per cent of bilateral flows, 26 per cent of
approvals from multilateral climate funds and 20 per cent of MDB climate finance. While
bilateral channels and MDBs increased their adaptation finance commitments to the LDCs
from 20172018 to 20192020, multilateral climate funds decreased their adaptation finance
while doubling their mitigation finance from 20172018 to 20192020.
24. In 20192020, funding provided to the SIDS accounted for 3 per cent of bilateral
flows, 7 per cent of approvals from multilateral climate funds and 2 per cent of MDB climate
8
The fifth BA, for the first time, presented a geographical breakdown of public bilateral sources,
multilateral climate funds and MDBs with a unified regional classification in accordance with the
standard country or area codes for statistical use (M49) of the United Nations Statistics Division.
Only non-Annex I Parties were included in the country grouping analysis.
FCCC/CP/2022/10/Add.2
15
finance. International public climate finance flows to SIDS are predominantly adaptation
focused. Grant finance plays a strong role in SIDS, ranging from 43 to 89 per cent across the
channels analysed. The LDCs and SIDS have specific vulnerabilities and needs, which are
partially reflected in the climate finance provided to them on a per capita basis. Per capita
climate finance reached USD 3.616.9 for SIDS and USD 0.89.4 for the LDCs in
20192020 (see figure 4).
Figure 4
Geographical distribution of climate finance by volume and on a per capita basis in
20192020
25. Between 2016 and 2020, private climate finance mobilized by developed
countries for developing countries through bilateral and multilateral channels totalled
USD 66.8 billion. Of this amount, 86 per cent was mobilized for mitigation actions,
particularly in the energy sector (53 per cent of total mobilized finance in the five-year
period). Private finance mobilized for adaptation actions targeted industry, mining and
construction. Private climate finance was mobilized through number of mechanisms,
dominated by direct investment in companies and special purpose vehicles, which together
accounted for 44 per cent of the total. MDBs mobilized 57 per cent of total estimated private
climate finance, followed by bilateral providers and multilateral climate funds. SIDS and the
LDCs received 1 and 8 per cent respectively of total private finance mobilized.
26. Accreditation to multilateral climate funds increased by 36 per cent in
20192020, driven by a rising number of national and regional institutions being
accredited; however, while national and regional accredited entities now account for
FCCC/CP/2022/10/Add.2
16
more than half of all accredited entities, they accounted for only 10 per cent of financial
outflows in 20192020. Climate finance readiness and project preparation initiatives play a
key role in facilitating access to climate finance. The number of partners through which
developing countries can access multilateral climate funds continues to grow rapidly, driven
by GCF accreditation. Efforts are under way to enhance access beyond national and regional
entities, by supporting access at the local level.
27. Interest in country platforms that facilitate country ownership of climate finance
flows and their alignment with national priorities is emerging. Country ownership is a
fundamental factor in the delivery of effective finance but is also a broad concept
encompassing active stakeholder engagement, links between climate policies and economic
growth and development policies, and national spending and tracking systems for climate
finance. Recent studies drawing on experience from development cooperation suggest that to
be successful in stimulating climate action, country platforms need to secure and maintain
political will, coordinate public finance from multiple channels and harness private
investment. Also important is that country platforms are tailored to country needs and
priorities.
28. Reported expected and actual results from climate finance providers indicate an
increase in portfolio-level emission reductions and number of beneficiaries reached.
Multilateral climate funds reported a combined 96.3 Mt CO
2
eq emission reductions achieved
and 54.8 million beneficiaries reached through their interventions. Expected results from the
portfolios of approved or currently implemented projects are orders of magnitude higher, for
example, 1,980 Mt CO
2
eq emission reductions and 588 million direct and indirect
beneficiaries in the GCF portfolio alone. While multilateral climate funds are increasing their
transparency and reporting under their results frameworks more regularly, they face
persistent challenges in impact measurement, namely, that direct project output indicators are
easier to define that outcome indicators and that reporting on actual results is largely
dependent on the reporting capacity of implementing entities. MDBs present mitigation and
adaptation outcomes to varying degrees against their results and impact frameworks, often
for their entire portfolios rather than on climate-specific support, while bilateral contributors
have differing approaches to impact reporting. In general, it takes at least several years before
being able to report on outcomes and impacts of approved and implemented projects
supported by climate finance, and this time lag poses challenges for comprehensive portfolio
impact reporting.
29. The way in which gender issues are addressed under the governance and
operational frameworks of the operating entities of the Financial Mechanism and
multilateral climate funds has improved. However, the development of systems for
monitoring and reporting on gender-related outcomes at the project and portfolio level is still
in progress, as is the building of capacity of the operating entities to implement gender-
responsive policies. This suggests work remains to be done on strengthening gender
mainstreaming efforts and the availability of gender-disaggregated and other gender-related
data to evaluate outcomes.
30. Global climate finance flows are small relative to the overall needs of developing
countries. Global climate finance in 20192020 was estimated to be USD 803 billion. This
amount is 3132 per cent of the annual investment needed for the global temperature rise to
follow a well below 2 °C or a 1.5 °C pathway. This level of climate finance is also below
what one would expect in the light of the investment opportunities identified and the cost of
failure to meet climate stabilization targets.
31. More can be done to ensure that finance flows are consistent with climate change
objectives. Such efforts include the reform of fiscal policies, financial policies and
regulations and the integration and management of climate risk for financial decision-making
processes by private actors and the financial sector, with care taken in all circumstances to
manage a just and equitable transition for all.
32. Given the scale and speed of effort needed to align finance flows with low-emission,
climate-resilient development pathways, it is critical to consider climate finance flows within
the context of broader finance flows (see figure 5). A sole focus on positive climate finance
flows will be insufficient to meet the overarching purpose and goals of the Paris Agreement.
FCCC/CP/2022/10/Add.2
17
This does not mean that broader finance flows must all have explicit beneficial climate
outcomes, but it does mean that they must integrate climate risks into decision-making and
avoid increasing the likelihood of negative climate outcomes.
Figure 5
Global climate finance in the context of broader finance flows, opportunities and costs
Notes: (1) Data points are provided to place climate finance in context and do not represent an
aggregate or systematic view; (2) All flows are global and annual averages for 20192020 unless
otherwise stated; (3) The representation of stocks that overlap is not necessarily reflective of real-world
overlaps. The flows are not representative of all flows contributing to the stocks; (4) Climate finance
flows are those represented in section B of the summary and recommendations and chapter 2 of the
fifth BA technical report; (5) For data sources, see chapter 3 of the fifth BA technical report.
33. Across the key areas of climate finance identified through the recommendations
arising from previous BAs, the findings of the fifth BA reveal both progress and continuing
challenges, as presented in the table below.
FCCC/CP/2022/10/Add.2
18
Following up on recommendations from previous BAs: progress and challenges
Area of recommendation
a
Progress
Challenges
Improve transparency of reporting
of climate finance provided and
received
(a), (b), (c), (d)
Improved reporting tables agreed for
implementation in 2024
Increasing number of developing
countries reporting on climate finance
received
Limited capacities and resources to
track climate finance received and
report on the impacts and outcomes of
climate finance
Improve data coverage, granularity
and tracking of flows from all
sources, including developing
country Parties, international
financial institutions and private
finance data providers
(e), (f), (g), (h)
Increasing data coverage for financing
of electric vehicles, climate finance
mobilized and domestic climate finance
reporting
Scarcity of data on energy efficiency,
the AFOLU sector, buildings,
industrial sectors and adaptation, in
particular from the private sector, as
well as on SouthSouth cooperation
Align climate finance with national
needs, plans, climate change
frameworks and priorities,
enhancing country ownership
(j), (l), (p)
Significantly increased number of
direct access entities and national
implementing entities and other
accredited entities of multilateral
climate funds
Growing number of national
investment plans and strategies to
target climate finance
Publication of needs determination
report
Finance flows channelled through
regional and national entities remain
low
Lack of support for local-level access
beyond national or regional entities
Methodological, capacity and data
limitations in development of project
pipelines
Balance funding for mitigation and
adaptation
(l)
Increase in adaptation finance of 39
and 48 per cent through bilateral
channels and MDBs respectively
since 20172018
Achievement by GCF of a 50:50 balance
in mitigation and adaptation
on a grant-equivalent basis
Most adaptation finance from bilateral
channels and multilateral climate funds
now in the form of grant finance
Difficulties in costing adaptation
needs to inform assessments of
balance
Different accounting approaches
applied for mitigation and adaptation
finance to inform assessment of
balance
Encourage the uptake of available
resources to strengthen
institutional capacities for
programming climate action and
tracking climate finance
(k), (l)
21 dedicated access, readiness and
project preparation support modalities
offered by multilateral climate funds
48 identified national climate funds in
countries that are not OECD members
48 jurisdictions with domestic climate
finance tracking systems, and 35
taxonomies formulated by 30
jurisdictions and 5 international or
national organizations
Different funding requirements of
diverse climate finance actors
Time lag in reporting from nascent
domestic climate finance tracking
Improve tracking and reporting of
the impacts of climate finance,
including the incorporation of
‘climate proofing’ and climate
resilience measures in line with
new scientific information
(n), (o)
Increased granularity of impact
measurement frameworks (three
multilateral climate funds have adopted
revised frameworks since 2018)
Wide availability of expected results
reporting
Initial development of transformational
change indicators
Limited ex post results data in
reporting chains
Limited availability of climate finance
specific portfolio-level impact
reporting from MDBs and bilateral
sources
Trade-offs between results
measurement comparability and
context-specific impact measurement
(including at the country, local and
sectoral level)
FCCC/CP/2022/10/Add.2
19
Area of recommendation
a
Progress
Challenges
Limited approaches for measuring
transformational change
Improve tracking and reporting of
gender-related aspects of climate
finance
(m)
Gender mainstreaming in governance
and operational frameworks of climate
finance contributors (all multilateral
climate funds with revised frameworks
or policies since 2018)
Limited implementing capacities and
availability of gender-disaggregated
data on outcomes and impacts
Update data sets and information
relevant to Article 2, paragraph
1(c), of the Paris Agreement
(i), (q)
Global proliferation of private and
public sector actor approaches for
aligning finance flows
Lack of data on implementation of
Paris alignment approaches and on
common standards in approaches to
prevent greenwashing this
complicates evaluation of approaches
a
Letters in parentheses denote the relevant recommendation from para. 51 of the summary and recommendations of the third (2018)
BA (available at https://unfccc.int/BA-2018). No recommendations were included in the fourth (2020) BA.
III. Recommendations
34. The SCF invites the COP and the CMA to consider the recommendations presented
in chapter III.AC below. The three sets of recommendations relate to chapter II.AC above.
A. Methodological issues related to climate finance flows
35. Recommendations on methodological issues related to climate finance flows are as follows:
(a) Encourage Parties to report on climate finance provided, mobilized, needed
and received in the new common tabular format for their first biennial transparency report to
the highest level of granularity possible, taking into account the flexibility for those countries
that need it in the light of their capacities, in accordance with the modalities, procedures and
guidelines of the enhanced transparency framework under the Paris Agreement, in particular
to report annual activity-level data;
(b) Encourage Parties to adopt or follow green- and climate-budgeting approaches
and improve or establish climate finance tracking systems at the domestic level to inform
their implementation of nationally determined contributions and adaptation communications;
(c) Encourage climate finance providers and recipients to report climate finance
provided, mobilized, needed and received at both the activity- and the country-level;
(d) Encourage climate finance and data providers to further improve the data and
the methodologies necessary for tracking private finance mobilized by developed countries,
and others in a position to do so, through technical assistance, policy support and other public
interventions for climate action in developing countries;
(e) Encourage Parties and climate finance providers to enhance their
methodologies for measuring and reporting on climate finance results and impacts;
(f) Encourage Parties and climate finance providers to enhance their reporting on
the qualitative aspects of climate finance, including policies, approaches and other factors
related to strong enabling environments and delivering results;
(g) Encourage Parties, through the enhanced transparency framework and taking
into account the work of the SCF on definitions of climate finance, to better track climate
finance provided, mobilized, needed and received;
(h) Encourage climate finance providers and data aggregators, in keeping with
social inclusion and the potential value of information and data from the informal private
sector and from local and indigenous communities, as well as noting the usefulness of proxy
data, to incorporate into their systems the tracking of climate finance flows and impacts
relating to these stakeholders;
FCCC/CP/2022/10/Add.2
20
(i) Encourage climate finance providers to enhance their reporting on elements
relevant to Article 2, paragraph 1(c), of the Paris Agreement, thus increasing the ability to
advance work related to pathways for low-emission, climate-resilient development.
B. Overview of climate finance flows
36. Recommendations on the overview of climate finance flows are as follows:
(a) Encourage climate finance providers, including multilateral and other financial
institutions, relevant non-financial institutions and data providers, when reporting on climate
finance, to enhance the availability of granular, country-level data on finance for adaptation and
resilience as well as on finance for mitigation in the AFOLU and the water and sanitation sectors;
(b) Encourage climate finance providers and recipients to further enhance the
tracking of private climate finance, in particular for adaptation activities;
(c) Invite private sector associations and financial institutions to build on the
progress made on ways to improve data on climate finance and to engage with the SCF,
including through their participation in the forums of the SCF with a view to enhancing the
quality of the BA.
C. Assessment of climate finance flows
37. Recommendations on the assessment of climate finance flows are as follows:
(a) Encourage climate finance providers to continue to enhance country
ownership and consider policies to improve the balance between support for mitigation and
adaptation at the global level, taking into account country-driven approaches and recipient
country capacities and priorities;
(b) Encourage climate finance providers to enhance access and increase climate
finance for the LDCs and SIDS;
(c) Encourage developed countries, other climate finance providers and recipients
to continue to enhance access to climate finance, including by addressing the barriers to
access arising from the complex architecture of multilateral climate funds, and to enhance
country ownership through supporting modalities such as direct access entity and national
implementing entity accreditation, readiness and project preparation facilities and
subnational- and local-level access programmes;
(d) Encourage development finance institutions, in particular MDBs, to continue
their essential role in helping developing countries to deliver on their nationally determined
contributions by expanding climate investment through either expanding the availability of
development assistance or boosting climate-related investment directly;
(e) Encourage developing countries to take advantage of available modalities and
to advance in-country efforts to strengthen institutional capacities for climate change
programming and for tracking its effectiveness and impacts;
(f) Encourage climate finance providers and recipients to improve the tracking
and reporting of portfolio-level results in terms of the impacts and outcomes of climate
finance and advance the development of indicators for measuring the outcomes of climate
finance interventions;
(g) Encourage climate finance providers and recipients to improve the tracking,
reporting and dissemination of best practices in relation to the gender-related aspects of
climate finance, impacts of climate finance interventions and gender-responsive budgeting;
(h) Request the SCF, in preparing the sixth BA, to follow up on the
recommendations made in this and previous BAs.
10
th
plenary meeting
20 November 2022